A technology start-up has developed a text-message service that it says banks can use to improve customer service.

Many financial companies offer text-message alerts, but some observers say these one-way services are not taking full advantage of what has become one of the most widely used communication formats on the planet.

"Consumers are trying it and not finding it as helpful as they'd hoped," said Mark Schwanhausser, a research analyst at Javelin Strategy and Research in Pleasanton, Calif. "Customers want SMS, but they want it better." For banks to attract customers and make the most effective use of short message services, Schwanhausser and other analysts say texting should be transformed into a two-way engagement.

A recent Javelin study is predicting a slowdown in the number of households receiving text alerts as they conclude that alerts fail to deliver timely information, are too generic and are too difficult to tailor.

Stepping into the text fray last month was SoundBite Communications Inc., which introduced a text system that connects text services to banks' call centers.

Rather than requiring a call to a customer support center, SoundBite's Contact Center Text Messaging Solution lets people send text messages using a keyword and five-digit telephone number, known as a short code. When the text message is sent, the SoundBite system reviews it using predefined business rules. Based on the results, the software can automatically respond with a personalized text message.

If the person's text message warrants special attention, the message can be routed to an agent who can see the entire message history and respond using the SoundBite software. The entire text message conversation can transfer from agent to automation and vice-versa, depending on the person's most recent response.

Executives at SoundBite said that people may be frustrated by banks' current text capabilities but that texting remains the preferred means of communication for many of them.

A survey commissioned by SoundBite with Chacha.com found that 52% of respondents prefer customer support through texting but that 35% preferred voice. One big motivator was that texting does not require a customer to wait on hold, said Alan Berrey, SoundBite's vice president of market development.

George Peabody, the director of Mercator Advisory Group's emerging technologies advisory service, agreed that SoundBite's technology might be a potent new tool for companies that want to leverage consumers' communications preferences and the ubiquity of the mobile phone. "They're taking the experience with Web chat and opening it up to a broader audience because of SMS's huge user base," he said.

George Tubin, a senior research director at TowerGroup, said two-way texting makes enormous sense. "Alerts now are static but useful. But to take action, I've got to go to the bank branch or make a call."

That said, SoundBite will face two hurdles in getting banks to use its technology. First, there are technology budget concerns. And second, SoundBite must muscle into a competitive field.

ClairMail Inc., Sybase Inc. and Mobile Commerce Ltd. are just some of the big players in the business. All three offer mobile baking software that integrates Web browsers, applications and text messaging; some analysts wonder whether SoundBite's text-only approach is viable even if its customer service focus is unique.

Schwanhausser said it is crucial that banks integrate all three capabilities into their mobile offerings "because that's what customers demand."

And Red Gillen, a senior analyst at Celent, added, "The market is pretty saturated. If [SoundBite] is serious, they need all three."